South Korea for much of the last decade has had a free hand in the Asia-Pacific region’s casino market. In that time the country has built itself a successful casino industry based mainly on foreign gamblers. But in the coming years South Korea might suddenly find itself encircled by a host of competing markets: to the north casinos are being developed in the designated gaming zone near Vladivostok in Russia, to the south in the Philippines large casino resorts are nearing completion, and to the east Japan’s politicians seem close to permitting casinos too. South Korea will have to fight hard to maintain its place in the new Asia-Pacific gaming market.
South Korea currently has 17 casinos, but 16 of these properties are open to foreign visitors only. Just one casino – the Kangwon Land Resort – is open to both South Korean nationals and foreign visitors. Foreigners-only casinos have been permitted in a select number of cities and provinces with international airports, passenger terminals, or special tourism zones.
In 2006 South Korea’s domestic casino market became more competitive as the Grand Korea Leisure Corp (GKL) opened three new casinos to attract foreign visitors, mainly from China. GKL is a subsidiary of the state’s Korea National Tourism Organisation (KNTO) and runs the casinos under the Seven Luck brand.
Prior to the new state-run casinos, Paradise Group was the market leader in the foreign-casino market. It operates five casinos, the biggest being Paradise Walker Hill in Seoul. Back in 2005 Paradise’s casinos had a market share of almost 90% and casino revenues of KRW 388.5bn. By 2007 its market share was just under 50% and revenues were KRW 308.9bn.
In the middle of the last decade South Korea had a lot less competition for international casino gamblers in the region. Certainly players could travel to Australia and Macau, or even across the Pacific to Las Vegas, but Singapore’s resorts were still in the early stages of planning, Japan seemed a long way from permitting casinos, and Putin’s gaming zones in Russia were still several years away.
The number of Chinese visitors to South Korea’s casinos has been increasing rapidly since 2005. There were just under 107,000 Chinese visitors in 2005, a figure which rose to 585,163 by 2010. As a percentage of foreign (non-Korean) visitors, the Chinese represented 18.6% in 2005 and 30.1% in 2010. The South Korean government has recognised that Chinese tourists are a growing sector and has implemented plans specifically to try and attract them to visit the country. In August 2010, for example, the government introduced the Chinese Tourist Visa System Improvement Program which extends the issue of multiple entry visas.
The casinos have also adapted their marketing strategies accordingly. Whereas previously they had focused on Japanese gamblers, now they are targeting Chinese gamblers based in cities within a two-hour flight of South Korean casinos.
As in Macau, Baccarat is the most popular game in the Korean casinos, followed by Blackjack and roulette and there are 526 gaming tables in the 16 casinos.
Despite being very successful, and bringing many thousands of visitors to South Korea each year, the gambling industry – including casinos – is not held in high regard in South Korea because of various scandals. Kangwon Land, for example, has been the subject of 23 lawsuits from problem gamblers who blame the casino for exacerbating their addiction by lifting entrance bans and allowing them to place bets in excess of the set limits.
More pressing concerns for the sector are the surprise doubling of casino tax to 20% of revenues and the suggestion that the government is looking to impose a cap on casino earnings.
But the Korean gaming industry is responding to the fact that it is facing increased competition for players in the region. Local media reported at the beginning of January 2011 that an un-named US company had made a visit to Seoul with a view to investing in a new hotel and casino complex on Yeongjong Island, Incheon.
At the start of October 2011 Paradise Group was selected by the Incheon International Airport Corporation as the preferred bidder for the casino resort near Incheon International Airport. Paradise Group will invest KRW 662.1 billion (US$572 million) in capital to build an integrated resort comprising of luxury hotels, a convention centre, shopping outlets, and events arena.
Phase one will be ready by 2016 and will include a 500-room luxury hotel, foreigners-only casino, and shopping arcade. The second phase will be completed by 2018 and will add an additional 250-room hotel, convention centre, and spa. Paradise Group’s existing Golden Gate Casino, currently located in the Hyatt Regency Incheon, will relocate into the resort.
At the end of June 2011 the Minister of Tourism said that Korean citizens should be allowed to play in more than the one casino currently available to local citizens.
Of course, there is no guarantee that all of the competing projects wanting to steal South Korea’s gamblers will come to fruition nor that they will all get their strategies and facilities right to attract those gamblers. But the region’s gamblers do look set to be spoilt for choice as to where to spend their money in the next decade.